Senate votes to advance Biden’s tax and climate bill
The US Senate has voted to advance president Joe Biden’s climate, tax and healthcare legislation, bringing the president and his party a big step closer to securing passage of their flagship economic package just months before the midterm elections.
The procedural vote on Saturday sets up hours of debate and a new series of votes on amendments to the bill — known as the Inflation Reduction Act — until an expected vote on final passage in the upper chamber as early as Sunday.
The bill includes the largest injection of US public funds into the fight against climate change through $369bn in clean energy incentives, while allowing the government to negotiate lower prescription drug prices — both longstanding Democratic priorities. It also includes measures that will increase the tax bill on large corporations, such as a 15 per cent minimum tax on their profits and a 1 per cent tax on share buy backs.
“The days of our nation’s biggest companies paying zero dollars in federal income tax are numbered,” Biden said on Twitter on Saturday, just hours before voting was due to start.
At the eleventh hour, Democrats were forced to strip the legislation of a provision gutting the preferential tax treatment for private equity and hedge fund managers, known as carried interest, in order to secure the support of centrist Arizona Senator Kyrsten Sinema. But the 755-page package does include $80bn in additional funding for the Internal Revenue Service to ramp up audits of wealthy taxpayers.
Overall, the bill will reduce the deficit by more than $300bn over a decade.
Fifty Democratic senators voted in favour of the bill, while 50 Republicans opposed it, but it cleared its first hurdle — known as the motion to proceed — in the upper chamber after Kamala Harris, the vice-president, broke the tie and cast the deciding vote.
After passing a $1.9tn stimulus early in his administration, and a $1.2tn bipartisan infrastructure bill in November, Democrats and the White House had struggled to complete Biden’s domestic economic agenda amid resistance from moderate lawmakers within their party. But after extensive talks with Sinema and Joe Manchin, the West Virginia centrist Democrat, they finally reached an agreement in recent weeks on a much slimmer version of the original package.
“This is one of the most comprehensive and far reaching pieces of legislation that has come before the Congress in decades. It will help just about every citizen in this country and make America a much better place,” Chuck Schumer, the Senate majority leader, said ahead of the vote on Saturday.
Assuming the bill is passed, it would represent the latest in a string of legislative wins for Biden this summer, including passage of a bid to provide new subsidies for semiconductor manufacturing in America and bipartisan gun control legislation following mass shootings in New York and Texas.
Republicans have adamantly opposed the tax and spending legislation, and many business groups have opposed certain provisions of the bill — including the prescription drug provisions and the tax increases.
“The vast majority of Americans believe our country is in a recession, and raising billions in taxes that will pass on to consumers is the wrong approach,” Todd Young, the Republican senator from Indiana, wrote in a tweet on Saturday.
Josh Bolten, the chief executive of the Business Roundtable, which represents the largest blue-chip American companies in Washington, said: “The US economy has faced two consecutive quarters of declining GDP and remains at risk of a protracted economic decline. Imposing more than $300bn in tax increases during a downturn is the wrong policy at the wrong time”.
If it passes the Senate, the legislation will still have to be approved by the House of Representatives before heading to Biden’s desk for his signature.
Key climate measures in the bill
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Methane penalty: $900 per metric ton of methane emissions that exceed federal limits in 2024, rising to $1,500 per metric ton in 2026
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Carbon capture and storage tax credit of $85 per metric ton, up from $50
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$30bn for solar panels, wind turbines, batteries, geothermal plants and advanced nuclear reactors, including tax credits over 10 years. Replaces short-term wind and solar credits
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$27bn for ‘green bank’ to support clean energy projects particularly in disadvantaged communities.
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$20bn to cut emissions in the agriculture sector
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$9bn in rebates for Americans buying and retrofitting homes with energy-efficient and electric appliances.
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$60bn to support low-income communities and communities of colour, includes grants for zero-emissions technology and vehicles, highway pollution mitigation, bus depots and other infrastructure located near disadvantaged communities
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$10bn in investment tax credits to build manufacturing facilities that make electric vehicles and renewable energy technologies
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Tax credit of up to $7,500 for the purchase of new clean vehicles, and offers for the first time a credit of $4,000 for used electric vehicles for households with maximum income of $150,000 a year
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